Is the value of the firm facing financial constraints reflected in its stock market? This is the question present study aimed to answer. Therefore, based on observable characteristics related to financial constraints, a portfolio of manufacturing companies, registered in Tehran stock exchange, was formed, and yearly return of each firm was determined. Then the KZ index was localized and its value for each company during each year between 1993 and 2003 was also determined. Findings showed a correlation between financial constrain, as a dependent variable, and stock return whereas no correlation was observed between different levels of financial constrain and stock return in companies accepted to Tehran Stick Market.
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